Recently, we’ve seen interest rates going down close to historic lows again. Freddie Mac says the national average for a 30 year fixed rate mortgage is down to about 3.6 percent. And for a 15 year mortgage, it’s even lower at about 2.9 percent.

 Home values are coming back up but in many ways it’s still a buyer’s market..And some buyers, especially first time buyers, may feel pressure to act now.  After all, we keep hearing this is a good time to buy which is true in many cases.  But is it a good time for “you” to buy.

“It’s really about – is it a goal of yours to own a home?  I suggest that’s where people start and then have a wish list,” says Richard Reeve with Consumer Credit Counseling.

He says look at pros and cons and truly consider what you can afford starting with your gross income. “Multiply that by two and a half up to three times and that should be the purchase price of the home.” says Reeve.

We use an example of someone who makes a gross income of $40,000.  Which means the purchase price should be about $120,00.

Reeve also says when it comes to the actual mortgage payment “figure about 40 percent of your actual income.”

That is what you actually take home every month.  He says the rule of thumb is that anything over 40 percent of that take home pay can make you “house poor.”

On the $40,000 income and the $120,000 purchase price, we get a monthly payment of about $800.  Reeve says aim for this target payment. You may think that’s low and that you can afford more and maybe you can. But he says there are often surprises in home ownership like maintenance expenses that buyers don’t put into their budget. He suggests setting aside one percent of the purchase price every year for maintenance. In this case that would  be about $1,200 per year.

“You need an outline to go through the process,” he says.

Reeve says Consumer Credit Counseling has several seminars a year for potential home buyers.  In addition to consulting a realtor and banker, he suggests first time buyers in particular may also want to consult a credit counselor.